9.3.3 Role of Research and Development

Scientific and technical capability are crucial to the economic and industrial
development of developing countries (Rama Rao, 1997; Song, 1997; Suttmeier,
1997; also Section 2.3 in Chapter 2
and Sections 4.3 and 4.12 in Chapter
4 discuss the role of R&D). Technology transfer is defined as the transfer
and development of "hardware" and "software". The "software"
may include scientific and engineering knowledge as well as managerial and operational
skills. Direct investment in industrial R&D may be included in the investment
figures discussed above. In industrialised countries the private sector is often
the largest investor in R&D. However, in developing and transitional countries,
the public sector is the largest contributor, e.g. in China (Song, 1997), the
Czech Republic (Moldan, 1997) and India (Rama Rao, 1997; Tripathy, 1997). Although
difficult to estimate, the R&D funds allocated to environmental technology
are only a small part of the total industrial technology R&D budget. Energy
R&D budgets of OECD countries have declined in past decades (Williams and
Goldemberg, 1995). Less than 6% of the total energy R&D budget in IEA countries
was spent on energy efficiency (incl. industrial technology), whereas most is
allocated to nuclear technology R&D (IEA, 1994). Scientific knowledge and
R&D are getting more and more internationally oriented, as evidenced by
foreign direct investment in R&D. It is estimated that foreign corporation
spending in the U.S. in 1994 amounted to 15 B$, or 15% of total industrial R&D
spending (Florida, 1997). Generally, FDI in R&D is comparatively small,
mostly directed to support local industry. However, FDI in R&D is growing
rapidly, particularly in the U.S., and also the focus is changing to developing
new products, obtaining information on local scientific developments and access
to local human capital (Florida, 1997). International R&D collaboration
can be an effective means of technology transfer (see, for example, Case
Study 4, Chapter 16), and recent initiatives like
the Climate Technology Initiative (CTI) can enhance this collaboration. Preliminary
analysis seems to suggest that newly industrialised countries seem to increase
the generation of scientific and technological knowledge within their countries,
although the majority of knowledge is still generated in the industrialised
world (Amsden and Mourshed, 1997). The type of scientific output and knowledge
may vary by country. In India, in 1994 to 1995, total research expenditure is
estimated to have been 0.8% of GDP (Rama Rao, 1997) and in China it was estimated
at 0.5% in 1995 (Song, 1997), while total spending in science and technology
development was estimated at 1.5% of GDP. The figures are slightly lower than
the years before. However, no accurate information is available on the global
role of and investments in scientific knowledge in developing countries.